Statechains
lightning · advanced
An off-chain protocol that lets users transfer ownership of a UTXO by passing the private key — coordinated by a server that can't unilaterally steal.
A statechain is a Bitcoin UTXO whose private key is collaboratively held: the user has the key, plus a co-signing "statechain entity" that holds a counterparty key. To transfer ownership, the current user signs a hand-off; the entity rotates its key share with the new owner; the UTXO is now controllable by the new pair.
The clever part: a pre-signed transaction lets the current key holder unilaterally exit on-chain at any time. The statechain entity can't steal because it can never sign without the user, and the user can always escape to L1.
Mercury Wallet (CommerceBlock) was the first production statechain. Compared to Lightning, transfers are instant and don't need a routable path or in-channel liquidity — the tradeoff is that you have to trust the entity to behave honestly during the transfer protocol, and exit timing matters.